The UK's banking regulator is drafting new rules for the crypto sector.
Prudential Regulation Authority (PRA), a United Kingdom financial services regulatory body, is working on rules for issuing and holding digital assets.
The news was revealed by the Bank of England (BOE) executive director of the Prudential Policy Directorate, Vicky Saporta.
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In her speech, Saporta noted that UK's banking regulator is working on creating more stringent regulations for crypto, including stablecoins and other digital assets that could destabilize the financial system.
On top of that, Saporta revealed that the UK's Parliament was working on the Financial Services and Markets Bill, which would empower the PRA with new responsibilities.
The executive director believes the UK’s laws should “incorporate a dynamic digital regulatory agenda that maintains safety without stifling innovation.”
The UK government is in the consultation phase on regulating the crypto sector. New standards that will be established for the crypto sector will align with other rules for other sectors under its purview.
In December, the Basel Committee on Banking Supervision, which regulates the global banking industry, published new rules for the crypto sector. These guidelines instructed banks to limit their crypto exposure to 1%, with a risk premium of 1,250%.
Saporta said the new rules will align with the Basel 3.1 guidelines. She noted that it was easier for internationally active firms to follow a single “global rulebook instead of having to meet the expense of adapting to a patchwork of local standards.”
According to Saporta, the new rules will replace the numerous regulations in place, which the UK inherited from the European Union, a supranational political and economic union it exited in 2020.
Authorities in the United Kingdom are eager to tighten their grip on the crypto industry. At the beginning of February, UK Financial Conduct Authority (FCA) revealed its plans to launch new and stricter crypto advertising rules. On top of that, in February, FCA started taking action against unregistered crypto ATMs.
